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Can You Qualify for a Mortgage If You Are in CAIVRS?

Can you qualify for a mortgage if you are in CAIVRS?

Harry Jensen, Trusted Mortgage Expert with 45+ Years of Experience
, Trusted Mortgage Expert with 45+ Years of Experience

Before I directly answer your question it is important to explain what the CAIVRS database is and how it impacts your ability to qualify for certain mortgage programs. CAIVRS stands for Credit Alert Interactive Verification Reporting System. Simply put, CAIVRS is a database run by the government -- HUD specifically -- that keeps track of borrowers who are delinquent on, defaulted on or had a claim paid on a government-backed loan.

Defaulting on a loan means that you failed to repay a debt according to the loan terms. Having a claim paid on a loan means that the federal government paid an insurance claim on a loan you were responsible for. For example, if the government was required to repay a lender for lost principal according to the terms of an FHA mortgage, this means the government paid a claim on your loan.

The CAIVRS database keeps track of delinquencies, defaults and claims paid on all government direct and guaranteed loan programs including FHA, USDA and VA mortgages, Small Business Association (SBA) loans and federally-backed student loans. Understanding if you are in the CAIVRS system is important because it impacts your ability to get approved for a government-backed mortgage or other type of loan.

Although most people who default on a mortgage or who have a claim paid on a loan are aware of the issue, it can be challenging to confirm if your name appears in the CAIVRS database because only approved lenders can access it. When you apply for a government-backed loan, such as a new mortgage, the lender checks the CAIVRS database.

If you are in the system, it may be impossible for you to qualify for a government-backed mortgage program or you may need to satisfy a waiting period before you can apply for the program. For example, if you experienced a foreclosure with an FHA or VA mortgage, the waiting period is three and two years, respectively. The waiting periods may be shorter if extenuating circumstances such as a job loss or medical illness contributed to the loan default.

It is important to highlight that lenders usually only check the CAIVRS database when you apply for a government-backed mortgage program such as an FHA, VA or USDA loan. If you apply for a conventional mortgage, which is not backed by the government, the lender should not check CAIVRS so appearing in the database should not directly impact your ability to qualify for the loan.

That said, regardless of if your name is in the CAIVRS database, delinquent or defaulted mortgages and loans usually appear on your credit report, which lenders review when you apply for a conventional mortgage. Depending on the timing of the default or delinquency and if the issue has been resolved satisfactorily, you may still be required to wait before you can get approved for a new mortgage.  The issue may also negatively impact your credit score, which can make it more challenging to qualify for the loan.

If your credit score has recovered and you meet the other eligibility requirements then you should be able to qualify for a conventional mortgage even if you appear in CAIVRS. In this case, because you are applying for a conventional loan, there is a good chance the lender does not check the CAIVRS database and relies solely on your credit report to assess your creditworthiness. This is why you should always review your credit report several months before you apply for a mortgage so you can identify and address any issues, including how past loans appear on your report.

After you have reviewed your current credit report, we recommend that you contact multiple lenders in the table below to learn more about their qualification requirements, particularly for applicants with credit challenges.  Shopping multiple lenders is the best way to find the lender and mortgage program that are right for you.

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Data provided by Informa Research Services. Payments do not include amounts for taxes and insurance premiums. Click for more information on rates and product details.

Sources

How CAIVRS Works: https://www.hud.gov/program_offices/housing/sfh/caivrs

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About the author

Harry Jensen, Mortgage Expert

Harry is the co-founder of FREEandCLEAR. He is a mortgage expert with over 45 years of industry experience. Over his career, Harry has closed thousands of loans for satisfied borrowers and now offers his advice and insights on FREEandCLEAR.  Harry is a licensed mortgage professional (NMLS #236752). More about Harry

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